DLL 2019-1 LLC Notes Assigned Preliminary Ratings

  • DLL 2019-1 LLC's note issuance is an ABS transaction backed by equipment loans and leases.
  • We assigned our preliminary ratings to the class A-1, A-2, A-3, and A-4 notes.
  • The preliminary ratings reflect our view of the transaction's credit support, payment structure, and collateral characteristics, among other factors.
NEW YORK (S&P Global Ratings) April 2, 2019--S&P Global Ratings today assigned 
its preliminary ratings to DLL 2019-1 LLC's asset-backed notes (see list).

The note issuance is an asset-backed securities (ABS) transaction backed by 
equipment loans and leases.

The preliminary ratings are based on information as of April 2, 2019. 
Subsequent information may result in the assignment of final ratings that 
differ from the preliminary ratings.

The preliminary ratings reflect: 
  • The availability of 10.70% initial hard credit support, which comprises overcollateralization and a cash reserve. The overcollateralization has a target and floor equal to 11.20% of the initial pool balance. The cash reserve, which will be funded at closing, equals 1.00% of the initial pool balance and is subject to a floor of 1.00%.
  • The availability of approximately 2.07% annual excess spread, based on the unstressed estimate.
  • Our expectation of timely interest and periodic principal payments by the final maturity date according to the transaction documents, based on stressed cash flow modeling scenarios using assumptions consistent with the assigned preliminary ratings. The total available credit support under the stressed cash flow modeling assumptions provides coverage of our total stressed loss range of 13.95%-14.45%. This range accounts for stressed credit losses and residual losses, based on our cumulative net loss range of 1.70%-2.00% and our 55% stress to residual values.
  • DLL Finance LLC's status as a wholly owned subsidiary of De Lage Landen International B.V. and, ultimately, Coƶperatieve Rabobank U.A. (Rabobank; A+/Positive/A-1), and our view of their financial strength and servicing experience. The servicer has decades of experience in commercial finance, including underwriting and risk management, specifically in the financing of agricultural-related equipment.
  • The pool's collateral characteristics, including seasoning of approximately 16 months; a high percentage of new equipment (89%) and monthly pay contracts (78%); a mix of both professional (55%) and lifestyle (45%) obligors, as well as agricultural (81%) and golf and turf (19%) equipment; a low level of residuals (11%); and individual obligor concentrations of less than 1.00% each.
  • Our forward-looking views of the agricultural sector, which anticipate continued revenue and income effects on farmers due to trade tensions.
  • Coverage that is consistent with our credit stability criteria, considering a moderate stress scenario of losses and recoveries.
  • The transaction's legal structure.
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